GIST OF RECENT PRONOUNCEMENTS ON GST (PART-XIX)

[Dr. Sanjiv Agarwal]

Goods and Services Tax (GST), introduced from July 1, 2017 is more than a year and half old now but has resulted in operational and implementation disruptions affecting all stakeholders.  GST law, as drafted and legislated, is not free from the interpretational hassles. GST Council is however, making regular changes to fix the anomalies and hardships faced by taxpayers.  32 meetings of GST Council have been held till 15^th January, 2019.

Taxpayers have already challenged various provisions of GST laws and rules framed thereunder with over 300 writs being filed in different courts. High courts and Supreme court have taken a liberal stand so far in view of the fact that law is new and is yet evolving. However, CBIC may move to Supreme court where the verdict is against the Government. In recent past, CBIC had issued directions to be officers to defend the writs. Further, we have now rulings from Authority for Advance Ruling (AAR) and National Anti-profiteering Authority (NAA) also. Even the orders from Appellate Authority for Advance Ruling have also started pouring in and we have over two dozen Appellate Orders from AAAR. Further, there are about 30 Orders of NAA out of which two Anti-profiteering cases have gone to Delhi High Court.

Here are few more judicial pronouncements for information and guidance of various stakeholders. It is expected that the litigation by way of writs is bound to go up as time passes by unless the Government comes out with proactive approach and solutions.

• In  Torque Pharmaceuticals (P.) Ltd. v. State of U.P. 2018 (5) TMI 75 - ALLAHABAD HIGH COURT , the petitioner was engaged in manufacturing of medicines and mineral water and its manufacturing unit is situated at Derabassi, Punjab and Baddi, Himanchal Pradesh. Certain stock was transferred against the stock transfer invoices after paying the IGST @ 18% and the goods were being transported from Himanchal Pradesh and the E- Way Bill prescribed under the provision of CGST Rules was downloaded in which the vehicle number being HP12C-2297 as well as other details were duly mentioned.

Petitioner submitted that on account of activities of Transport Union, the transportation of goods with a vehicle provided by the transport union of Himanchal Pradesh is permitted to transport the goods from Himanchal Pradesh to Chandigarh and thereafter from Chandigarh to its onward journey another vehicle is required to be booked. Hence Part B was later filled by hand.  The petition was filed against seizure order due to filing of part B of e-way bill by hand.

The contention of the petitioner is that since the movement of goods from Baddi to Gorakhpur and also from Derabassi to Gorakhpur, was on two different vehicles via Chandigarh, hence while uploading the details, the petitioner though tried to mention the numbers and details of both set of vehicles but since the portal was not accepting two vehicle numbers for one transaction, the petitioner had no option but to mention the subsequent vehicle number by hand.

The E-Way Bill which has been issued initiatlly when the goods/vehicle started its journey from Himanchal Pradesh/Punjab by mentioning the vehicle number in the E-Way Bill but after reloading in another vehicle at Chandigarh since the official portal was not permitting to mention the details of two transport vehicles, the registration number of the second transport vehicle has been mentioned by hand.

Court therefore held that where assessee had sent goods by way of stock transfer from Baddi (HP) to Gorakhpur (UP), which were unloaded from vehicle and were loaded in another vehicle for onwards journey, and further since official portal was not permitting to mention details of two transport vehicles in E-way bill, registration number of second vehicle had been mentioned in E-way bill by hand, seizure of goods on ground that details of second vehicle had been mentioned in E-way bill by hand not justified.

• In B.R. Agriculture Industries v. State of U.P.  (2018) 8 TMI 210 (Allahabad),  the goods of the petitioner have been seized from the business place in pursuance of a seizure order passed under Section 67. Since respondents wanted time to file counter affidavit, it was held that where the amount equal to value of tax and penalty be deposited as security by way other than by cash or bank guarantee or indemnity bond, to the satisfaction of the seizing authority goods under seizure shall be released forthwith.
• In Ramesh Chand Kannu Mal v. State of UP (2018) 5 TMI 761;   the petitioner is a firm dealing with all kinds of Iron Scrap etc. and is registered under the provision of GST Act, 2017.

The respondent passed a seizure order by which he has seized the goods as well as vehicle on the ground that the goods were being transported from outside the state of U.P. without the Transit Declaration Form, which is in violation of law.

It was contended that there is no requirement for generation or downloading of the Transit Declaration Form-I for the goods crossing/passing through the State of U.P. He has further submitted that since the TDF-I is not required under the law, the seizure of goods and the vehicle on the ground of non availability of TDF-I is wholly illegal and without jurisdiction.

The court observed that with effect from 01.02.2018 there was no requirement to download the Transit Declaration Form-I as the same was not required under the law after the aforesaid cut of date.

There is no doubt with regard to transaction in question as the Integrated Goods and Service Tax (IGST) has been charged by the petitioner in its invoice and when the IGST is required to be paid then there cannot be any intention to evade the payment tax namely SGST and CGST.

Where Department passed a seizure order by which he seized goods as well as vehicle on ground that goods were being transported from outside State of U.P. without Transit Declaration Form (TDF), in view of fact that on date of incident i.e. 24-3-2018, neither there was any E-way bill system nor any notification by Central Government under rule 138, requiring carrying of a TDF Form or any other such document in course of inter-State supply/movement of goods, impugned order passed by Department was to be set aside.

The court observed that on the relevant date i.e. 24.03.2018, there was no requirement of carrying TDF Form-1 in the case of an inter-State supply of goods. In fact on the relevant date there was no prescription of the documents to be carried in this regard under Rule 138 of the CGST Act, 2017, accordingly, the seizure and penalty imposed upon the petitioners based on the notification dated 21.7.2017 issued under Rule 138 of the UPGST Act 2017, which was not applicable, is clearly illegal.

The goods and vehicles were ordered to be released forthwith and Authorities directed to return the amount paid in pursuance of seizure proceedings.

• In Vertible Technologies & Designs v. State Tax Officer ( 2018 (5) TMI 462 - KERALA HIGH COURT , it was held that recovery against assessee was directed to be stayed until his stay petition was considered by Appellate Tribunal. To facilitate an expeditious disposal of the stay petition, Department directed the petitioner to place a certified copy of this judgment, along with a copy of this writ petition, before the Appellate Tribunal, and the time-frame granted in this judgment shall begin from the date on which the copy of the judgment and the writ petition are placed before the Tribunal.

• In Remark Flour Mills Pvt. Ltd. v. State of Gujarat  (2018) 4 TMI 1292;   the petitioner company challenged three actions of the tax department arising out of common facts. Petitioner company was engaged in supply of wheat flour, meslin flour, cereal flour, etc. Such activity would invite SGST and CGST at prescribed rates. However, this was a matter of dispute.

They were supplying such goods in packets which are branded as well as unbranded. The packings of more than 25 kgs were branded goods, the rest were unbranded.

The officers visited the factory and under threat, collected cheques for ₹ 19.74 lakh but petitioner instructed the bank not to clear the cheques and hence cheques were returned by bank unpaid. The department subsequently issued show cause notice for recovery of ₹ 36.88 lakhs and provisionally attached bank account. Again, the adjudicating authority issued fresh notice under the purported exercise of powers under Section 74(3) of the Central Goods and Services Tax Act calling upon the petitioners to show cause why a sum of ₹ 1.29 crores towards CGST and SGST not be recovered from the period between July, 2017 and 20-2-2018. The petitioners have challenged this second show cause notice, on the ground of lack of jurisdiction.

The court held that practice of collecting post-dated cheques under coercion during raid is not permissible means of collection of revenue particularly when no tax demand confirmed or crystallized. Department directed to return such cheque.

Show cause notice being already issued by Adjudicating Authority earlier, second impugned show cause notice pertaining to same period and same demand of unpaid taxes but for a much higher amount under Section 74(3) of Central Goods and Services Tax Act, 2017 was not proper. Powers under Section 74 (3) cannot be exercised for expanding or enlarging liability arising out of show cause notice under sub-section (1) for the same period, sub-sections (1) and (3) of Section 74 being envisaged to cover separate periods.

It was further held that attachment of bank accounts is in the nature of a drastic measure for a temporary period and cannot be exercised in a routine manner. No reason was given by Department as to why exercise of such drastic power of attachment of bank accounts was necessary. However, petitioners were directed to maintain at all time a stock worth minimum sum of ₹ 50 lacs till the final disposal of adjudication proceedings.

(Some more cases to follow)